IOTALedger of Things

Internet of Things“50 billion connected devices in 2020” -Cisco

Intro-Video

Smart Centralization

Cloud EVERYTHING

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Potential problems of IoT

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Single Source of Failure

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Censorship

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Smart Devices, Dumb Network

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Data Transfer

Money Transfer 9

Blockchain

“Why the Blockchain Is the Biggest Thing Since the Internet” -NASDAQ

Distributed Ledgers

● Every party has an individual copy

● Prone to tampering

● High cost to compare datasets

● No way of verifying the original dataset

Traditional Ledgers

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● Datasets shared amongst all parties

● Every party can verify the datasets of other participants in the network

● Tampered datasets are excluded

● An immutable single source of truth is established

Distributed Ledger

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Single Source of Truth

Shared Truth

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Illustration from Bitwage.com

+ = ?14

Blockchain’s Limitations

● Scalability

● Storage

● Bandwidth

● Fees

● No Data Privacy

● Expensive Data Storage

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I o T Requirements

● Low Resource Consumption

● Widespread interoperability

● Billions of nano-transactions

● Data Integrity

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The solutionRethink from scratch

A revolutionary new distributed ledger designed for Machine-to-Machineinteractions.

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Blockchain without the Blocksand the Chain. What???

Tangle

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● Limited to Block Size and Time

● Not scalable● Transaction Censorship (fee

thresholds)● Centralization● Consensus Decoupled● 80% of miners from China● ...

“Include my transaction, here is my fee”

Blockchain’s Limitations

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Tangle

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Tangle● Bundles all transactions in a Directed Acyclic

Graph (DAG)● Completely self-regulating, consensus no longer

decoupled● Very Scalable. Low overhead Proof-of-Work to

prevent spam

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● No Fees

● Scalable

● Quantum Proof

● Modular

● Lightweight

● Offline 22

$0.01- $0.01 + $0.01

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Data Integrity

● Data is tamper-proof

● Enables automatic processes

● Remove humans from the equation

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Scale

Usability

Blockchain

IOTA Tangle

Scalability

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Go Offline

Offline Tangle Cluster

Main Tangle

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If this then that

Smart Contracts

Turing Completeness

SecurityVery CheapScalableLow Entry Barrier (based on SQL) 27

OUR VISION28

Economy of Things

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Sharing Economy 2.0Anything with a chip in it can be leased Devices trade resources among each other

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No longer bound to machines hardware!

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Cloud, Fog and Mist

EDG

EC

OR

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● Real Time Processing

● Avoid network congestion and signal collisions

● Incentive for interoperability

● Data Integrity

Requirements

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CURRENT STAGE

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Protocol and Network Statistics

◉ Official launch July 11th

◉ 1 year of development

and testing

◉ Community of 1000+

◉ More than 2m transactions

◉ $60m+ of value transferred

◉ More transactions per

second than any blockchain

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(Unofficial slide)◉ Tech problems with auto-discovery/slow syncing

and double-spending wallets◉ Network currently down◉ Community Management◉ Funding of Foundation and Big Deal◉ Anniversary update, Release 1.1, +1 Dev,

+1Bussines, Phase 2 (utility), Exchanges

IOTA Foundation

We are an open-source, non-profit Software Foundation. Goal of the Foundation is it to establish IOTA as a standard in the IoT stack.

Foundation members

David Sønstebø Dominik Schiener Sergey Ivancheglo Serguei Popov

USE CASES

Bandwidth on demand

Supply Chain VisibilityBanks

Insurance Providers

Customs

Importers/Exporters

Shipping Liners

Logistic Companies

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< / >

Smart-Grid

Other Use Cases

● Sensor Data selling & Data Marketplace

● On-demand API access

● Data Integrity (insurance, banking, etc.)

and now...End of IOTA Foundation

presentation

...The Tanglein more details

Skipping over the whitepaper

Basics● DAG Basic Examples (trees, direct, indirect, confirmation)● Approvment DAG (IOTA) vs Transaction DAG (BTC)● Main Idea: Issuing a Tx needs PoW (Approving other Tx)● Approving means

Signature verification & Check for double spendings

● But which Tx to approve???

A bit of terminology● Genesis & Tips● (own) weight (∝ amount of PoW)● cumulative weight ● Score

Tip Selection Algorithm● Only guideline for network, no rule● Simple strategy: Choose two random tips

● Does not encourage approving tips by lazy nodes● Because probability that their tips will get approved is equal to

the one of the tips that did real PoW● Solution: Bias towards end (i.e. tips with high score)

Tip Selection Algorithm● Simple strategy 2: Choose two tips out of the 10% with the

highest scores● Problem: Vulnerable against double-spending “large weight”-

attack will eventually always succeed

Tip Selection Algorithm● Mitigation strategy: Cap Max weight of transaction

● This drastically decreases probability of attacker● But he can still beat us by pre-building a parasite-chain

A parasite● Main tangle tip score ≈ Sum of main tangle weights● Parasite tangle tip score ≈ Sum of main tangle and parasite

chain weights● Parasite chain can be build without broadcasting

● Idea: main tangle should have more active hashing power

● which is ∝ cum weight

The Final Tip Selection Algorithm● How do we figure out which tip is on the main tangle?● We place some „particles“ deep in the tangle● And let them walk towards the tips● With affinity to high cumulative weights (MCMC)

● This will very unlikely select lazy tips● and very unlikely parasite chain tips

Double Spending● Conflicting Tx can exist in the Tangle● Network has to decide which Tx (SubTangle) will not get

orphaned● Methodology: Run tip selection Algorithm many times and

see how often the conflicting Tx are (indirectly) approved by the tips

● Result: Transactions in the subTangle with less hashing power will eventually get orphaned

Interesting Details● All addresses can only get used once● Spamming the network actually helps it● Coordinator helps network until enough nodes are online● Tx actually have a particular structure (bundles)